EQUITY REGISTRATION RIGHTS AGREEMENT
DATED AS OF
May __, 2002
BY AND AMONG
MARINER HEALTH CARE, INC.
AND
THE PERSONS LISTED ON THE
SIGNATURE PAGES ATTACHED HERETO
TABLE OF CONTENTS
PAGE
ARTICLE I. Definitions and Rules of Construction................................................................2
1.1 Definitions.........................................................................................2
1.2 Rules of Construction...............................................................................5
ARTICLE II. Shelf Registration..................................................................................5
2.1 Filing of Shelf Registration Statement..............................................................5
2.2 Underwriting Procedures.............................................................................6
ARTICLE III. Demand Registration................................................................................8
3.1 Right to Demand Registration........................................................................8
3.2 Exceptions to Demand Registrations..................................................................8
3.3 Blackout Period.....................................................................................9
3.4 Priority in Registration...........................................................................10
3.5 Effective Demand Registration......................................................................10
3.6 Revocation of Demand Registration..................................................................10
3.7 Continuous Effectiveness of Registration Statement.................................................11
3.8 Selection of Underwriters in an Underwritten Demand Registration...................................11
ARTICLE IV. Piggyback Registration.............................................................................11
4.1 Right to Piggyback.................................................................................11
4.2 Priority in Piggyback Registration.................................................................12
ARTICLE V. Procedures and Expenses.............................................................................13
5.1 Registration Procedures............................................................................13
5.2 Information from Holder............................................................................17
5.3 Roadshows..........................................................................................18
5.4 Holdback Agreements................................................................................19
5.5 Suspension of Disposition..........................................................................19
5.6 Registration Expenses..............................................................................19
ARTICLE VI. Indemnification....................................................................................20
6.1 Indemnification by the Company.....................................................................20
6.2 Indemnification by Holders.........................................................................21
6.3 Conduct of Indemnification Proceedings.............................................................21
6.4 Contribution, etc..................................................................................22
ARTICLE VII. Miscellaneous.....................................................................................23
7.1 Additional Parties.................................................................................23
7.2 Notices............................................................................................24
7.3 Assignment.........................................................................................24
7.4 No Third-Party Beneficiaries.......................................................................25
7.5 Counterparts.......................................................................................25
7.6 Entire Agreement...................................................................................25
7.7 Amendment and Waiver...............................................................................25
7.8 No Waiver..........................................................................................25
7.9 Headings...........................................................................................25
7.10 Severability.......................................................................................26
7.11 GOVERNING LAW......................................................................................26
7.12 Specific Performance...............................................................................26
7.13 Further Assurances.................................................................................26
EQUITY REGISTRATION RIGHTS AGREEMENT
This EQUITY REGISTRATION RIGHTS AGREEMENT (this "Agreement"),
dated as of May __, 2002 (the "Effective Date"), is made by and among Mariner
HEALTH CARE, Inc., a Delaware corporation formerly known as Mariner Post-Acute
Network, Inc. (the "Company"), each of the Holders that is the Beneficial Owner
as of the Effective Date of at least 10% or more of the outstanding Shares (as
defined in Section 1.1) on the Effective Date, as listed on the signature pages
attached hereto, each Permitted Transferee (as defined in Section 1.1) and any
other Holders that are the Beneficial Owners as of the Effective Date of at
least 10% or more of the outstanding Shares on the Effective Date who may become
parties to this Agreement from time to time pursuant to and in accordance with
Section 7.1 of this Agreement.
RECITALS
A. The Company, its subsidiaries and affiliated
partnerships, joint ventures and limited liability companies that are debtors
and debtors in possession have filed with the United States Bankruptcy Court in
the District of Delaware the Joint Plan of Reorganization, dated as of November
30, 2001 (as amended for confirmation and confirmed by an order of the United
States Bankruptcy Court for the District of Delaware, dated April 3, 2002,
including all exhibits thereto and all documents incorporated by reference
therein or contained in the documentary supplement thereto, the "Joint Plan").
B. Pursuant to the Joint Plan and the transactions
contemplated thereby, each of the Holders may become the Beneficial Owner (as
defined in Section 1.1) of shares or Warrants (as defined in Section 1.1)
exercisable to purchase shares of common stock, par value $.01 per share, of the
Company to be issued on the Effective Date or reserved for issuance after the
Effective Date, together with any other equity securities that may be issued by
the Company in substitution therefor pursuant to the Joint Plan ("New Common
Stock").
C. In accordance with the terms of the Joint Plan, the
Company desires to provide for the registration of the sale by the Holders of
the Registrable Securities (as defined in Section 1.1) from time to time, on the
terms and subject to conditions set forth below.
AGREEMENTS
NOW, THEREFORE, in consideration of the foregoing and the
covenants and agreements herein contained, and intending to be legally bound
hereby, the parties hereto hereby agree as follows:
ARTICLE I.
Definitions and Rules of Construction
1.1 Definitions. All terms defined in the Joint Plan
shall have such defined meanings when used herein or in any Exhibit hereto
unless otherwise defined herein or therein. As used in this Agreement, the
following terms shall have the following meanings:
"Advice" shall have the meaning defined in Section 5.5.
"Affiliate" means, as to any Person, any other Person which,
directly or indirectly, is in control of, is controlled by, or is under common
control with, such Person. For purposes of this definition, "control" of a
Person means the power, directly or indirectly, either to (a) vote 10% or more
of the securities having ordinary voting power for the election of directors of
such Person or (b) direct or cause the direction of the management and policies
of such Person, whether by contract or otherwise.
"Agreement" shall have the meaning defined in the Preamble.
"Beneficial Owner" or "Beneficial Ownership" shall have the
meaning defined in Rule 13d-3 under the Exchange Act.
"Blackout Period" shall have the meaning defined in Section
3.3.
"Board" means the Board of Directors of the Company or any
committee thereof duly authorized to act on behalf of such Board of Directors.
"Business Day" means a day other than a Saturday, Sunday or
other day on which commercial banks in New York City are authorized or required
by law to close.
"Company" shall have the meaning defined in the Preamble.
"Demand Registration" shall have the meaning defined in
Section 3.1.
"Demand Registration Notice" shall have the meaning defined in
Section 3.1.
"Demand Request" shall have the meaning defined in Section
3.1.
"Demand Request Threshold" shall have the meaning defined in
Section 3.1.
"Effective Date" shall have the meaning defined in the
Preamble.
"Effective Period" shall have the meaning defined in Section
2.1.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
2
"Extension Period" shall have the meaning defined in Section
5.5.
"Holders" means the parties to this Agreement on the Effective
Date that are the Beneficial Owners of at least 10% or more of the outstanding
Shares on the Effective Date and each other Person that becomes a party to this
Agreement from time to time after the Effective Date pursuant to and in
accordance with Section 7.1 of this Agreement that was the Beneficial Owner on
the Effective Date of at least 10% or more of the outstanding Shares on the
Effective Date.
"Indemnified Party" shall have the meaning defined in Section
6.3.
"Indemnifying Party" shall have the meaning defined in Section
6.3.
"Joint Plan" has the meaning defined in Recital A.
"Losses" shall have the meaning defined in Section 6.1.
"Nasdaq" means the Nasdaq Stock Market, Inc.
"New Common Stock" shall have the meaning as defined in
Recital B.
"New Warrant Agreement" means that certain Warrant Agreement
dated May [9], 2002 between the Company and American Stock Transfer & Trust
Company, as the Warrant Agent.
"Other Holders" shall have the meaning defined in Section 4.2.
"Permitted Transferee" means any Person who (i) acquires from
a Holder or Holders, in compliance with all applicable securities laws, all or a
portion of such Holder's Registrable Securities and, as a result of such
transfer or transfers, has Beneficial Ownership of 10% or more of the shares of
New Common Stock then outstanding and (ii) agrees to be bound by the terms of
this Agreement.
"Person" means any individual, corporation, partnership, joint
venture, limited liability company, association, joint-stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
"Prospectus" means, with respect to any Registration
Statement: if Rule 434 under the Securities Act is relied on, the term sheet
that is first filed pursuant to Rule 424(b)(7) under the Securities Act,
together with the preliminary prospectus identified therein that such term sheet
supplements; if Rule 434 under the Securities Act is not relied on, the
prospectus first filed with the SEC pursuant to Section 424(b) under the
Securities Act; and if Rule 434 under the Securities Act is not relied on and no
prospectus is required to be filed pursuant to Rule 424(b) under the Securities
Act, the prospectus included in such Registration Statement at the time when it
is or was declared effective; in each case, as amended or supplemented by any
prospectus supplement, all other amendments and supplements to such prospectus
(including
3
post-effective amendments), and all exhibits and all material incorporated by
reference or deemed to be incorporated by reference in such prospectus.
"Registration Request" shall have the meaning defined in
Section 2.2.
"Registrable Securities" means (i) the Shares, including a
Holder's or Holders' Shares purchasable upon the exercise of Warrants and held
by such Holder or Holders and (ii) any securities paid, issued or distributed in
respect of any of the Shares by way of stock dividend, stock split or
distribution, or in connection with a combination of shares or a
reclassification of shares, recapitalization, reorganization, merger or
consolidation, or otherwise, including a Holder's or Holders' Shares purchasable
upon the exercise of Warrants and held by such Holder or Holders; provided,
however, that as to any Registrable Securities, such securities will irrevocably
cease to constitute "Registrable Securities" if: (A) such securities are
disposed of pursuant to an effective registration statement under the Securities
Act; (B) such securities are distributed to the public pursuant to Rule 144; (C)
such securities have been transferred to any Person other than a Permitted
Transferee; or (D) such securities cease to be outstanding.
"Registration Expenses" shall have the meaning defined in
Section 5.6.
"Registration Statement" means any registration statement of
the Company under the Securities Act on a form the Company is then eligible to
use that covering any of the Registrable Securities pursuant to the provisions
of this Agreement, including the related Prospectus, all amendments and
supplements to such registration statement (including post-effective
amendments), and all exhibits and all materials incorporated by reference or
deemed to be incorporated by reference in such registration statement.
"SEC" means the Securities and Exchange Commission (or any
successor thereto).
"Securities Act" means the Securities Act of 1933, as amended.
"Shares" mean the shares of New Common Stock issued to the
Holders pursuant to the Joint Plan on or after the effective date of the Joint
Plan.
"Shelf Registration Statement" shall have the meaning defined
in Section 2.1.
"Underwritten Offering Notice" shall have the meaning defined
in Section 2.2.
"Underwritten Registration" or "Underwritten Offering" means a
registration in which securities of the Company are sold to one or more
underwriters for reoffering to the public pursuant to a firm commitment
offering.
"Underwriting Request Threshold" shall have the meaning
defined in Section 2.2.
"Violation" shall have the meaning defined in Section 6.1.
4
"Warrants" means the warrants to purchase shares of New Common
Stock issued under the Joint Plan pursuant to the New Warrant Agreement.
1.2 Rules of Construction. Unless the context otherwise
requires, (a) all references to Articles or Sections are to Articles or Sections
of this Agreement, (b) each term defined in this Agreement has the meaning
assigned to it, (c) all uses of "herein," "hereto," "hereof" and words similar
thereto in this Agreement refer to this Agreement in its entirety, and not
solely to the Article, Section or provision in which it appears, (d) "or" is
disjunctive but not necessarily exclusive, and (e) words in the singular include
the plural and vice versa.
ARTICLE II.
Shelf Registration
2.1 Filing of Shelf Registration Statement. (a) As
promptly as practicable following the Effective Date, the Company shall file
with the SEC a Registration Statement covering the resale of the Registrable
Securities by the Holders on a continuous basis pursuant to Rule 415 under the
Securities Act (the "Shelf Registration Statement"). The Company shall use its
best efforts to cause the Shelf Registration Statement (A) to be declared
effective under the Securities Act within 90 days (but in no event more than 180
days) following the Effective Date and (B) once effective, to remain
continuously effective for a period ending on the earlier of: (i) the first date
on which there ceases to be any Registrable Securities; and (ii) the second
anniversary of the date on which the SEC declares such Shelf Registration
Statement effective ("Effective Period") (subject to extension pursuant to
Section 5.5). The Company shall not register any securities other than
Registrable Securities pursuant to the Shelf Registration Statement; provided,
however, that, as contemplated by the registration rights agreement covering
certain Junior Lender Notes (as defined in the Joint Plan), dated as of even
date herewith, among the Company and the parties named therein, the Company
shall be permitted to register pursuant to the Shelf Registration Statement
other securities of the Company issued pursuant to the Joint Plan. The plan of
distribution contained in the Shelf Registration Statement shall permit
Underwritten Offerings. The Shelf Registration Statement shall comply as to form
in all material respects with the requirements of the Securities Act and the
rules and regulations promulgated thereunder, permitting registration of such
Registrable Securities for resale by the Holders in the manner or manners
designated by them (including, without limitation, one or more underwritten
public offerings). If the Shelf Registration Statement ceases to be effective
for any reason at any time during the Effective Period (other than because of
the sale of all of the securities registered thereunder, the Company shall use
its best efforts to obtain the prompt withdrawal of any order suspending the
effectiveness thereof, and the Effective Period shall be extended pursuant to
Section 5.5 for the Extension Period.
(b) Effective Registration. A registration shall not be
deemed to have been effected pursuant to a Shelf Registration Statement (i)
unless the Shelf Registration Statement with respect thereto has been declared
effective by the SEC or become effective in accordance with the Securities Act
and the rules and regulations thereunder and kept effective as
5
contemplated by this Section 2.1(b), (ii) if, after it has become effective,
such registration becomes subject to any stop order, injunction or other order
or requirement of the SEC or other governmental agency or court for any reason
other than an act or omission by a Holder or an underwriter selected by the
Holders (provided that this item 2.1(b)(ii) will not be deemed applicable if the
Company obtains the removal of the relevant stop order, injunction or other
order or requirement and extends the Effective Period as provided in Section
5.5), or (iii) the conditions to closing specified in the purchase agreement or
underwriting agreement entered into in connection with such registration are not
satisfied, other than by reason of some act or omission by Holders or an
underwriter. If a registration pursuant to this Section is deemed not to have
been effected, then the Company shall continue to be obligated to effect a
registration pursuant to Section 2.1(a) until such registration is effected. The
provisions of Sections 3.3(a), (b) and (c) shall apply to the Shelf Registration
Statement.
2.2 Underwriting Procedures. (a) If Holders of at least
the lesser of 20% of the Registrable Securities, determined as of the date
hereof, or Registrable Securities with a then-current market value of $50
million (the "Underwriting Request Threshold") so request in writing (a
"Registration Request"), the Company shall effect pursuant to the Shelf
Registration Statement an Underwritten Offering; provided, however, that the
Company shall not be required to take any action in response to any such
request:
(i) if the Company has effected an Underwritten
Offering pursuant to this Section 2.2(a)
within the 270-day period immediately
preceding such request;
(ii) if, following the receipt of all responses
to the Underwritten Offering Notice, the
Registrable Securities requested to be
included in the Underwritten Offering have a
then-current market value of less than $50.0
million;
(iii) if the Holders making such request have not
secured the services of an underwriter or
underwriters (it being understood that the
Company shall have no obligation to secure
the services of an underwriter on behalf of
the Holders); or
(iv) if entitled to delay action pursuant to
Section 3.3.
The Company shall give written notice (an "Underwritten Offering Notice") of the
proposed Underwritten Offering to all Holders within 15 calendar days after
receipt of a valid Registration Request. Such notice shall offer the Holders the
opportunity to include in such Underwritten Offering such amount of Registrable
Securities as each Holder may request. The Company shall include in such
Underwritten Offering all Registrable Securities for which the Company has
received written requests for inclusion within 15 calendar days after delivery
of the Underwritten Offering Notice, subject to Section 2.2(b).
(b) The Company shall cause the managing underwriter or
underwriters of a proposed Underwritten Offering to permit the Holders that have
requested Registrable
6
Securities to be included in an Underwritten Offering, undertaken pursuant to
Section 2.2(a) above, to include all such Registrable Securities on the same
terms and conditions as all other Registrable Securities to be included.
Notwithstanding the foregoing, if the managing underwriter or underwriters of
such Underwritten Offering advises the Company and the selling Holders that the
total amount of Registrable Securities that such Holders propose to include in
such Underwritten Offering is such as to materially and adversely affect the
success of such Underwritten Offering, then the Company shall include in such
Underwritten Offering up to the full amount of Registrable Securities requested
to be included in such Underwritten Offering by the Holders (allocated pro rata
among the Holders on the basis of the amount of Registrable Securities initially
requested to be included therein by each such Holder) so that the total amount
of Registrable Securities to be included in such Underwritten Offering is the
full amount that, in the written opinion of such managing underwriter or
underwriters, can be sold without materially and adversely affecting the success
of such Underwritten Offering.
(c) Any Registrable Securities may be withdrawn from a
proposed Underwritten Offering at any time before the execution and delivery by
such Holder of the underwriting agreement relating to such Underwritten
Offering. In the event that the number of Holders withdrawing Registrable
Securities from a proposed Underwritten Offering before the execution and
delivery of an underwriting agreement relating to such Underwritten Offering
causes the number of Holders participating in such offering to drop below the
requirement set forth in Section 2.2(a)(ii) above, the Holders withdrawing their
Registrable Securities shall reimburse the Company for all of its out-of-pocket
fees and expenses (including counsel fees and expenses) incurred in connection
with the proposed Underwritten Offering in excess of the amount of expenses
relating solely to the maintenance of the Shelf Registration Statement and the
Company shall have no obligation to proceed with the applicable request for an
underwritten offering; provided, however, that if such withdrawal was based on
the Company's failure to comply with its obligations hereunder, such
reimbursement shall not be required and the requested Underwritten Offering
shall not be deemed to have been effected for purposes of Section 2.2(a).
(d) The managing underwriter or underwriters of the
Underwritten Offering relating thereto shall be selected by the Holders of at
least a majority of the Registrable Securities proposed to be included in such
Underwritten Offering, subject to the approval of the Company (which approval
shall not be unreasonably withheld or unreasonably delayed).
ARTICLE III.
Demand Registration
3.1 Right to Demand Registration. Upon termination of the
Effective Period, Holders holding in the aggregate at least 10% or more of the
Registrable Securities (determined as of the Effective Date) (the "Demand
Request Threshold") have the right to request in writing ("Demand Request") that
the Company effect the registration of all or part of such Holder's or Holders'
Registrable Securities with the SEC under and in accordance with
7
the provisions of the Securities Act (which written request shall specify the
aggregate number of shares of Registrable Securities requested to be registered
and the intended means of disposition of such shares of Registrable Securities)
("Demand Registration"). The Company shall give written notice (a "Demand
Registration Notice") of the proposed Demand Registration to all Holders within
15 calendar days after receipt of a valid Demand Request. Such notice shall
offer the Holders the opportunity to register such amount of Registrable
Securities as each Holder may request. Following receipt of the Demand Request,
if applicable, the provisions of Section 2.2 hereof shall apply to the subject
Demand Registration. Subject to Section 3.4, the Company shall file a
Registration Statement covering such Holder's or Holders' Registrable Securities
requested to be registered as promptly as practicable (and, in any event within
60 days) after receipt of such written requests received within 15 calendar days
after delivery of the Demand Registration Notice.
3.2 Exceptions to Demand Registrations. Notwithstanding
anything in Section 3.1 above to the contrary, the Company shall not be required
to take any action pursuant to this Article III:
(i) if the Holder or Holders making such request
are not Affiliates of the Company at the
time such request is made;
(ii) if the Company has effected a registration
contemplated by this Article III or Section
2.1 within the 180-day period next preceding
such request (unless the provisions of
Section 2.2 are applicable to a Demand
Request in which case the terms of Section
2.2(a)(i) shall apply);
(iii) if a shelf registration is effective at the
time such request is made pursuant to which
the Holder or Holders that requested
registration could effect the disposition of
such Holder's or Holders' Registrable
Securities in the manner requested and the
Company offered, in accordance with the
procedures set forth herein, to include or
did include such Holder's or Holders'
Registrable Securities in such shelf
registration;
(iv) if the Registrable Securities requested to
be registered shall have a then-current
market value of less than $50.0 million; or
(v) during the pendency of any Blackout Period
(as defined in Section 3.3 hereof).
3.3 Blackout Period. (a) If (i) at any time during the
Effective Period or the period during which Holders may request a Demand
Registration pursuant to Section 3.1, the Company files or proposes to file a
registration statement with respect to an offering of equity securities of the
Company for its own account and (ii) with reasonable notice (and subject to the
completion of an offering that may have been initiated pursuant to a previously
delivered Underwritten Offering Notice) (A) the Company (in the case of an
offering that is not an
8
Underwritten Offering) advises the Holders in writing that the Board of
Directors of the Company has determined, in the good faith exercise of its
reasonable business judgment, that a sale or distribution of Registrable
Securities (whether pursuant to the Shelf Registration Statement or a Demand
Registration) would adversely affect such offering or (B) the managing
underwriter or underwriters, if any, advise the Company in writing (in which
case the Company shall notify the Holders) that a sale or distribution of
Registrable Securities (whether pursuant to the Shelf Registration Statement or
a Demand Registration) would adversely affect such offering, then: (x) the
Holders agree to suspend sales pursuant to the Shelf Registration Statement
during the Blackout Period (as defined below), or (y) the Company shall not be
obligated to effect the initial filing of a Registration Statement pursuant to
Section 3.1 during the Blackout Period. As used herein the term "Blackout
Period" shall mean the 45 days prior to the date the Company in good faith
estimates (as certified in writing by an officer of the Company to the
applicable Holders) shall be the date of the filing of, and ending on the date
which is 90 days following the effective date of, the registration statement
proposed to be filed by the Company for its own account (the "Blackout Period").
(b) If the Board determines, in the good faith exercise
of its reasonable business judgment, that the registration and distribution of
Registrable Securities (i) would materially impede, delay or interfere with any
financing, acquisition, corporate reorganization or other significant
transaction involving the Company or (ii) would require disclosure of non-public
material information, the disclosure of which would materially and adversely
affect the Company, the Company shall promptly give the Holders written notice
of such determination and shall be entitled to (x) require that Holders suspend
resale transactions pursuant to the Shelf Registration Statement or (y) postpone
the filing or effectiveness of a Registration Statement for a reasonable period
of time not to exceed 120 days; provided, however, that the Company shall
deliver to the applicable Holders a general statement, signed by an officer of
the Company, of the reasons for such postponement or restriction on use (without
any need to identify with specificity the underlying event or issue which is the
predicate for such delay) and an estimate of the duration of the anticipated
delay. The Company shall promptly notify the applicable Holders of the
expiration or earlier termination of such a period.
(c) Notwithstanding anything in this Section 3.3 to the
contrary, there shall be no more than one delay period as contemplated by this
Section 3.3 during any consecutive 12 month period during the time in which
Holders may request a Demand Registration pursuant to Section 3.1.
3.4 Priority in Registration. If the Company seeks to
include in any underwritten Demand Registration any securities which are not
Registrable Securities and the managing underwriter advises the Company in
writing that in its opinion the number of Registrable Securities proposed to be
included in the Demand Registration exceeds the number of Registrable Securities
and other securities which can be sold in such offering, the Company shall
include in such registration: (i) first, the Registrable Securities requested to
be included which, in the opinion of such underwriters, can be sold, by the
selling Holders pro rata based upon the total number of Registrable Securities
which such Holder proposed to include in such
9
registration and (ii) second, the securities proposed to be included in such
registration by any other holders as determined by the Company and the managing
underwriter.
3.5 Effective Demand Registration. (a) The Company may
satisfy its obligations under Section 3.1 by amending (to the extent permitted
by applicable law) any registration statement previously filed by the Company
under the Securities Act so that such amended registration statement will permit
the disposition (in accordance with the intended methods of disposition
specified as aforesaid) of all of the Registrable Securities for which a Demand
Request has been properly made under Section 3.1. If the Company so amends a
previously filed registration statement, it shall be deemed to have effected a
registration for purposes of Section 3.1.
(b) Except as provided in Section 3.4, a registration
requested pursuant to Section 3.1 shall not be deemed to be effected for
purposes of Section 3.1(i) unless it has been declared effective by the SEC or
become effective in accordance with the Securities Act and the rules and
regulations thereunder and kept effective as contemplated by Section 3.7,
provided that a registration which does not become effective after the Company
has filed a registration statement with respect thereto solely by reason of the
refusal of a selling Holder to proceed (other than a refusal to proceed based
upon the reasonable advice of counsel relating to a matter with respect to the
Company) shall be deemed to have been effected by the Company at the request of
such selling Holder unless such selling Holder shall have elected to pay all
Registration Expenses in connection with such registration, (ii) if, after it
has become effective, such registration becomes subject to any stop order,
injunction or other order or requirement of the SEC or other governmental agency
or court for any reason other than an act or omission of a Holder or an
underwriter selected by the Holders, or (iii) the conditions to closing
specified in the purchase agreement or underwriting agreement entered into in
connection with such registration are not satisfied, other than by reason of
some act or omission by Holders or an underwriter selected by the Holders.
3.6 Revocation of Demand Registration. A Holder of
Registrable Securities to be included in a Registration Statement pursuant to
Section 3.1 may, at any time prior to the effective date of the Registration
Statement relating to such registration, revoke its request to have Registrable
Securities included therein by providing a written notice to the Company. In the
event the number of Holders of Registrable Securities revoking their request
causes the amount of Registrable Securities participating in such request to
fall below the requirement set forth in Section 3.2(iv), the Holders of
Registrable Securities who revoke such request shall reimburse the Company for
all its out-of-pocket fees and expenses (including counsel fees and expenses)
incurred in the preparation, filing and processing of the Registration Statement
and the Company shall have no obligation to proceed with the applicable Demand
Registration; provided, however, that, if such revocation was based on the
Company's failure to comply in any material respect with its obligations
hereunder, such reimbursement shall not be required and the requested
registration that has been revoked shall not be deemed to have been effected for
purposes of Section 3.1.
10
3.7 Continuous Effectiveness of Registration Statement.
The Company shall use its best efforts to keep a Registration Statement that has
become effective as contemplated by this Article III continuously effective for
a period of 90 days (subject to extension pursuant to Section 5.5) or such
shorter period that will terminate when all Registrable Securities covered by
such Registration Statement have been sold pursuant to such Registration
Statement; provided, however, that in no event will such period expire prior to
the expiration of the applicable period referred to in Section 4(3) of the
Securities Act and Rule 174 promulgated thereunder.
3.8 Selection of Underwriters in an Underwritten Demand
Registration. In the event that a registration requested pursuant to Section 3.1
is to be an Underwritten Registration, the managing underwriter or underwriters
of the Underwritten Offering relating thereto shall be selected by the Holders
of at least a majority of the Registrable Securities proposed to be included in
such Underwritten Registration, subject to the approval of the Company (which
approval shall not be unreasonably withheld or unreasonably delayed).
ARTICLE IV.
Piggyback Registration
4.1 Right to Piggyback. If at any time the Company
proposes to file a registration statement under the Securities Act with respect
to an offering of any class of equity securities (other than a registration
statement on Form X-0, Xxxx X-0 or any successor forms thereto and the Shelf
Registration Statement, whether or not for its own account, then the Company
shall give written notice (the "Piggyback Notice") of such proposed filing to
the Holders at least 30 days before the anticipated filing date. Such notice
shall offer the Holders the opportunity to register such amount of Registrable
Securities as each Holder may request (a "Piggyback Registration"). The Company
shall include in each Piggyback Registration all Registrable Securities for
which the Company has received written requests for inclusion within 15 days
after delivery of the Piggyback Notice, subject to Section 4.2; provided, that
if, at any time after giving written notice of its intention to register any
securities and prior to the effective date of the Registration Statement filed
in connection with such registration, the Company shall determine for any reason
either not to register or to delay registration of such securities, the Company
may, at its election, give written notice of such determination to each selling
Holder and, thereupon, (i) in the case of a determination not to register, shall
be relieved of its obligation to register any Registrable Securities in
connection with the such registration (but not from its obligation to pay the
Registration Expenses in connection with therewith), without prejudice, however,
to the rights of any selling Holder to request that such registration be
effected as a registration under Section 3.1, and (ii) in the case of a
determination to delay registering, shall be permitted to delay registering any
Registrable Securities for the same period as the delay in registering such
other securities. No registration effected under this Section 4.1 shall relieve
the Company of its obligation to effect any registration upon request under
Section 3.1, nor shall any such registration hereunder be deemed to have been
effected pursuant to Section 3.1. The Holders may withdraw all or part of the
Registrable Securities
11
from a Piggyback Registration by giving written notice to the Company of such
withdrawal any time before the fifth Business Day immediately preceding the
effective date of such Piggyback Registration.
4.2 Priority in Piggyback Registration. (a) The
Company shall cause the managing underwriter or underwriters of a proposed
Underwritten Offering to permit the Holders that have requested Registrable
Securities to be included in the Piggyback Registration to include all such
Registrable Securities on the same terms and conditions as any similar
securities, if any, of the Company. Notwithstanding the foregoing, if the
managing underwriter or underwriters of such Underwritten Offering advises the
Company and the selling Holder or Holders that the total amount of securities
that the Company, such Holders and any other Persons having rights to
participate in such Piggyback Registration ("Other Holders") propose to include
in such offering is such as to materially and adversely affect the success of
such Underwritten Offering, then:
(b) if such Piggyback Registration is a primary
registration by the Company for its own account, the Company shall include in
such Piggyback Registration: (i) first, all securities to be offered by the
Company; and (ii) second, up to the full amount of securities requested to be
included in such Piggyback Registration by the Holders and Other Holders having
rights to participate in such Piggyback Registration (allocated pro rata among
such Holders and Other Holders on the basis of the amount of securities
requested to be included therein by each such Holder or Other Holder) so that
the total amount of securities to be included in such Underwritten Offering is
the full amount that, in the opinion of such managing underwriter or
underwriters, can be sold without materially and adversely affecting the success
of such Underwritten Offering; and
(c) if such Piggyback Registration is an underwritten
secondary registration for the account of holders of securities of the Company,
the Company shall include in such registration: (i) first, all securities of the
Persons exercising "demand" registration rights requested to be included therein
(including without limitation the Person who demands registration and any
Persons who are entitled to participate in such Piggyback Registration pursuant
to the same agreement as the Person demanding such registration); and (ii)
second, up to the full amount of securities requested to be included in such
Piggyback Registration by the Holders and Other Holders having rights to
participate in such Piggyback Registration (allocated pro rata among such
Holders and Other Holders on the basis of the amount of securities requested to
be included therein by each such Holder or Other Holder) so that the total
amount of securities to be included in such Underwritten Offering is the full
amount that, in the written opinion of such managing underwriter or
underwriters, can be sold without materially and adversely affecting the success
of such Underwritten Offering.
12
ARTICLE V.
Procedures and Expenses
5.1 Registration Procedures(a) . (a) In connection with
the Company's registration obligations pursuant to Articles II, III and IV, the
Company shall effect such registrations to permit the sale of Registrable
Securities by a Holder in accordance with the intended method or methods of
disposition thereof, and pursuant thereto the Company shall as promptly as
reasonably practicable:
(b) Prepare and file with the SEC a Registration
Statement or Registration Statements available for the sale of the Registrable
Securities by the selling Holder in accordance with the intended method or
methods of distribution thereof; provided, however, that the Company (i) shall,
before filing, furnish to each selling Holder, its counsel and the managing
underwriter or underwriters, if any, copies of the Registration Statement or
Prospectus proposed to be filed, which documents shall be subject to the review
of such Holder, its counsel and such underwriters, (ii) shall provide such
Persons with a reasonable opportunity to review and comment on such Registration
Statement or Prospectus, and (iii) shall not file any such Registration
Statement or amendment thereto or any such Prospectus or supplement thereto
(including such documents incorporated by reference and proposed to be filed
after the initial filing of the Registration Statement) to which such selling
Holder, its counsel or such underwriter or underwriters, if any, shall
reasonably object on a timely basis, provided, however, that the Company may
file such document in a form required by law or upon the advice of its counsel.
(c) Prepare and file with the SEC such amendments and
post-effective amendments to each Registration Statement as may be necessary;
cause the related Prospectus to be supplemented by any required Prospectus
supplement, and as so supplemented to be filed pursuant to Rule 424 (or any
similar provision then in force) under the Securities Act; and comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such Registration Statement during the applicable period
in accordance with the intended methods of disposition by each selling Holder
set forth in such Registration Statement as so amended, or in such Prospectus as
so supplemented.
(d) Promptly notify each selling Holder, its counsel and
the managing underwriter or underwriters, if any, in writing (i) when a
Prospectus or any Prospectus supplement or post-effective amendment has been
filed, and, with respect to a Registration Statement or any post-effective
amendment, when the same has become effective, (ii) of any request by the SEC or
any other federal or state governmental authority for amendments or supplements
to a Registration Statement or related Prospectus or for additional information,
(iii) of the issuance by the SEC or any other federal or state governmental
authority of any stop order suspending the effectiveness of a Registration
Statement or the initiation of any proceedings for that purpose, (iv) of the
receipt by the Company of any notification with respect to the suspension of the
qualification or exemption from qualification of any of the Registrable
Securities for sale in any jurisdiction or the initiation of any proceeding for
such
13
purpose, (v) of the occurrence of any event which makes any statement made in
such Registration Statement or Prospectus untrue in any material respect or
which requires the making of any changes in a Registration Statement or
Prospectus or other documents so that, (A) in the case of the Registration
Statement, it will not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
the statements therein not misleading and (B) in the case of the Prospectus, it
will not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, and (vi) of the Company's reasonable determination that a
post-effective amendment to a Registration Statement would be appropriate.
(e) Use its best efforts to obtain the withdrawal of any
order suspending the effectiveness of a Registration Statement, or the lifting
of any suspension of the qualification or exemption from qualification of any of
the Registrable Securities for sale in any jurisdiction, at the earliest
practicable date.
(f) If requested by the managing underwriter or
underwriters, if any, or the selling Holder, (i) promptly incorporate in a
Prospectus supplement or post-effective amendment such information as the
managing underwriter or underwriters, if any, and such selling Holder reasonably
agree should be included therein under applicable law and (ii) make all required
filings of such Prospectus supplement or such post-effective amendment as soon
as practicable after the Company has received notification of the matters to be
incorporated in such Prospectus supplement or post-effective amendment;
provided, however, that the Company shall not be required to take any actions
under this Section 5.1(e) that are not, in the opinion of counsel for the
Company, in compliance with applicable law.
(g) Furnish to each selling Holder, its counsel and each
managing underwriter, if any, at least one conformed copy of the Registration
Statement and any post-effective amendment thereto, including financial
statements (but excluding all schedules, all documents incorporated or deemed
incorporated therein by reference and all exhibits).
(h) Deliver to each selling Holder, its counsel and the
managing underwriter or underwriters, if any, as many copies of the Prospectus
relating to such Registrable Securities (including each preliminary Prospectus)
and any amendment or supplement thereto as such Persons may reasonably request
and, by such delivery, the Company shall be deemed to have consented to the use
of such Prospectus or such amendment or supplement thereto by the selling Holder
and the underwriter or underwriters, if any, in connection with the offering and
sale of the Registrable Securities covered by such Prospectus or any amendment
or supplement thereto.
(i) Prior to any public offering of Registrable
Securities, register or qualify, or cooperate with each selling Holder, the
managing underwriter or underwriters, if any, and their respective counsel in
connection with the registration or qualification (or exemption from such
registration or qualification) of such Registrable Securities for offer and sale
under the securities or blue sky laws of such jurisdictions within the United
States as such selling Holder or underwriter or underwriters reasonably request
in writing; keep each such registration or
14
qualification (or exemption therefrom) effective during the period such
Registration Statement is required to be kept effective; and do any and all
other acts or things reasonably necessary or advisable to enable the disposition
in such jurisdictions of the Registrable Securities covered by the Registration
Statement; provided, however, that the Company shall not be required to (i)
qualify generally to do business in any jurisdiction in which it is not then so
qualified or (ii) take any action that would subject it to general service of
process in any jurisdiction in which it is not then so subject.
(j) Cooperate with the selling Holders and the managing
underwriter or underwriters, if any, to facilitate any filings with the NASD and
the timely preparation and delivery of certificates representing Registrable
Securities to be sold, which certificates shall not bear any restrictive legends
pertaining to resale of such Registrable Securities under the Securities Act,
and cause such certificates to be in such denominations and registered in such
names as the managing underwriter or underwriters, if any, shall request at
least two Business Days prior to any sale of Registrable Securities to the
managing underwriter or underwriters.
(k) As promptly as practicable upon the occurrence of any
event contemplated by Section 5.1(d)(v) or 5.1(d)(vi) hereof, prepare a
supplement or post-effective amendment to each Registration Statement or a
supplement to the related Prospectus, or file any other required document so
that, as thereafter delivered to the purchasers of the Registrable Securities
being sold thereunder, such Prospectus will not contain an untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
(l) Use its best efforts to cause all Registrable
Securities covered by such Registration Statement to be listed on Nasdaq or any
other national securities exchange; provided, however, that the Company then
meets the listing criteria of Nasdaq or any such other national securities
exchange.
(m) Engage an appropriate transfer agent and provide such
transfer agent with printed certificates for the Registrable Securities in a
form eligible for deposit with The Depository Trust Company, and provide a CUSIP
number for the Registrable Securities not later than the effective date of a
Registration Statement.
(n) Enter into such agreements (including, in the event
of an Underwritten Offering, an underwriting agreement in form, scope and
substance as is customary in Underwritten Offerings) and take all such other
actions in connection therewith (including those reasonably requested by any
selling Holder or, in the event of an Underwritten Offering, those reasonably
requested by the managing underwriter or underwriters) reasonably necessary or
desirable to expedite or facilitate the disposition of such Registrable
Securities, in connection with an Underwritten Registration, and (i) make such
representations and warranties to each selling Holder and the managing
underwriter or underwriters, if any, with respect to the business of the Company
and its subsidiaries, the Registration Statement or Prospectus, in each case, in
form, substance and scope as are customarily made by issuers to underwriters in
Underwritten Offerings and confirm the same if and when requested, (ii) use its
commercially
15
reasonable best efforts to obtain opinions of counsel to the Company and updates
thereof (which counsel and opinions (in form, scope and substance) shall be
reasonably satisfactory to the managing underwriter or underwriters, if any)
addressed to such selling Holder and the managing underwriter or underwriters,
if any, covering the matters customarily covered in opinions requested in
Underwritten Offerings, (iii) use its commercially reasonable best efforts to
obtain "comfort" letters and updates thereof from the independent certified
public accountants of the Company (and, if necessary, any other certified public
accountants of any subsidiary of the Company or of any business acquired by the
Company for which financial statements and financial data is, or is required to
be, included in the Registration Statement), addressed to each of the managing
underwriter or underwriters, if any, such letters to be in customary form and
covering matters of the type customarily covered in "comfort" letters in
connection with Underwritten Offerings, and (iv) deliver such documents (not
including the delivery of opinions of counsel under clause (ii) above to the
selling Holder) and certificates as may be reasonably requested by the selling
Holder, its counsel, managing underwriter or underwriters, if any, to evidence
the continued validity of the representations and warranties of the Company and
its subsidiaries made pursuant to clause (i) above and to evidence compliance
with any customary conditions contained in the underwriting agreement or similar
agreement entered into by the Company. The foregoing actions shall be taken in
connection with each closing under such underwriting or similar agreement as and
to the extent required thereunder.
(o) Give any selling Holder, its underwriter or
underwriters, if any, and their counsel and accountants, the reasonable
opportunity to participate in the preparation of such Registration Statement,
each Prospectus included therein or filed with the SEC, and each amendment
thereof or supplement thereto, make available for inspection by each of them all
pertinent financial and other records, pertinent corporate documents and
properties of the Company and its subsidiaries, cause the officers, directors
and employees of the Company and its subsidiaries to supply all information
reasonably requested by any such representative, underwriter, attorney or
accountant in connection with such Registration Statement and give each of them
such opportunities to discuss the business of the Company with its officers and
the independent public accountants who have certified its financial statements
as shall be necessary, in the reasonable opinion of such selling Holder's and
such underwriter's or underwriters' respective counsel, to conduct a reasonable
investigation within the meaning of the Securities Act; provided, however, that
any records, information or documents that are designated by the Company as
confidential at the time of delivery of such records, information or documents
shall be kept confidential by such Persons unless (i) such records, information
or documents are in the public domain or otherwise publicly available (other
than by reason of breach of this confidentiality provision), (ii) disclosure of
such records, information or documents is required by court or administrative
order or is necessary to respond to inquires of regulatory authorities, or (iii)
disclosure of such records, information or documents, in the reasonable opinion
of counsel to such Person, is otherwise required by law or regulation (including
without limitation pursuant to the requirements of the Securities Act or
regulations promulgated thereunder); provided, however, that in the case of
subsections (ii) and (iii) hereof, prior to making such disclosure the Holder
shall, subject to applicable law, advise and consult with the Company and its
counsel as to the timing and content of such disclosure and the nature and
wording of such disclosure and shall use its reasonable best efforts to obtain,
at the
16
Company's expense, confidential treatment therefor. Also, if possible, the
Company shall be given a reasonable time to intervene with the appropriate
authorities in order to prevent disclosure of the confidential information.
(p) Comply with all applicable rules and regulations of
the SEC and make generally available to its security holders earning statements
satisfying the provisions of Section 11(a) of the Securities Act, provided that
the Company shall be deemed to have complied with this Section 5.1(n) if it has
satisfied the provisions of Rule 158 under the Securities Act (or any similar
rule promulgated under the Securities Act).
(q) During the period when a Prospectus is required to be
delivered under the Securities Act, promptly file all documents required to be
filed with the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of the
Exchange Act.
(r) If the selling Holders of at least a majority of the
Registrable Securities proposed to be included in any Registration Statement so
request, request acceleration of effectiveness of the Registration Statement
from the SEC, provided at the time of such request the Company does not, in good
faith, believe it is necessary to amend further the Registration Statement in
order to comply with the provisions of this Section 5.1. If the Company wishes
to further amend the Registration Statement prior to requesting acceleration, it
shall have five Business Days to so amend prior to requesting acceleration.
5.2 Information from Holder. (a) The Company may
require each Holder including its Registrable Securities in any Registration
Statement to furnish to the Company such information regarding the Holder and
its intended plan and method of disposition of such Registrable Securities as
the Company may, from time to time, reasonably request in writing. The Company
may refuse to proceed with the registration of such Holder's Registrable
Securities if such Holder fails to furnish such information within a reasonable
time after receiving such request.
(b) Each selling Holder shall (i) notify the Company of
the occurrence of any event that makes any statement made in a Registration
Statement or Prospectus regarding such selling Holder untrue in any material
respect or that requires the making of any changes in a Registration Statement
or Prospectus so that, in such regard, (A) in the case of a Registration
Statement, it will not contain any untrue statement of a material fact or omit
any material fact required to be stated therein or necessary to make the
statements not misleading and (B) in the case of a Prospectus, it will not
contain any untrue statement of a material fact or omit any material fact
required to be stated or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading and (ii) provide
the Company with such information as may be required to enable the Company to
prepare a supplement or post-effective amendment to any such Registration
Statement or a supplement to such Prospectus as contemplated by Section 5.1(k).
(c) With respect to any Underwritten Offering, the
inclusion of a Holder's Registrable Securities therein will be conditioned upon
the execution and delivery by such Holder of an underwriting agreement in form,
scope and substance as is customary in
17
Underwritten Offerings, provided that a Holder will not be required to make any
representations or warranties other than with respect to such Holder, such
Holder's Registrable Securities, such Holder's intended method of distribution
and such other representations as may be required by law.
(d) If any such Registration Statement to be filed
pursuant to this Agreement refers to any Holder by name or otherwise as a holder
of any securities of the Company, then such Holder shall have the right to
require (i) the insertion therein of language, in form and substance
satisfactory to such Holder, to the effect that the holding by such Holder of
such securities is not to be construed as a recommendation by such Holder of the
investment quality of the Company's securities covered thereby and that such
holding does not imply that such Holder will assist in meeting any future
financial requirements of the Company, or (ii) in the event that such reference
to such Holder by name or otherwise is not required by the Securities Act or any
similar federal statue then in force, the deletion of the reference to such
Holder.
5.3 Roadshows. In connection with any Underwritten
Offering, the Company and members of its management (which shall include the
President and the Chief Financial Officer) or such other members of its
management acceptable to the managing underwriter or underwriters shall
participate in roadshows and other similar selling efforts as the managing
underwriter or underwriters shall reasonably deem to be necessary.
5.4 Holdback Agreements. The Company agrees to if so
required by the managing underwriter or underwriters not to sell, make any short
sale of, loan, grant any option for the purchase of (other than options pursuant
to a Company stock option plan, which options are not by their terms expected to
be exercisable for at least 90 days following the date of grant), effect any
public sale or distribution of or otherwise dispose of its equity securities or
securities convertible into or exchangeable or exercisable for any of such
securities during the seven days prior to and the 90 days after any Underwritten
Registration pursuant to Section 3.8 or 4.1 has become effective, except as part
of such Underwritten Registration and except pursuant to registrations on Form
X-0, X-0 or any successor forms thereto. During any Blackout Period, the Holders
agree, if so required by the managing underwriter or underwriters, not to sell,
make any short sale of, loan, grant any option for the purchase of, effect any
public sale or distribution of or otherwise dispose of any of the Company's
equity securities or securities convertible into or exchangeable or excisable
for any of such securities.
5.5 Suspension of Disposition. Each selling Holder shall
be deemed to have agreed that, upon receipt of any notice from the Company of
the occurrence of any event of the kind described in Section 5.1(d)(ii),
5.1(d)(iii), 5.1(d)(iv), 5.1(d)(v) or 5.1(d)(vi), such Holder shall discontinue
disposition of Registrable Securities covered by a Registration Statement or
Prospectus until such Holder's receipt of the copies of the supplemented or
amended Prospectus contemplated by Section 5.1(k) or until it is advised in
writing (the "Advice") by the Company that the use of the applicable Prospectus
may be resumed and has received copies of any additional or supplemental filings
that are incorporated or deemed to be incorporated by reference in such
Prospectus. In the event the Company shall give any such notice, the period of
time during which a Registration Statement should remain effective as set forth
in Section 2.1 or Section 3.5 shall be extended by the number of days comprising
the time period
18
commencing on and including the date of the giving of such notice to and
including the date when each seller of Registrable Securities covered by such
Registration Statement shall have received (i) the copies of the supplemented or
amended Prospectus contemplated by Section 5.1(k) or (ii) the Advice (the
"Extension Period"). The Company shall use its commercially reasonable efforts
and take such actions as are reasonably necessary to render the Advice as
promptly as practicable.
5.6 Registration Expenses. (a) Subject to Section
2.2(c) and 3.6, all fees and expenses incurred by the Company in complying with
Articles II, III and IV and Section 5.1 ("Registration Expenses") shall be borne
by the Company. Such fees and expenses shall include without limitation (i) all
registration and filing fees (including without limitation fees and expenses (x)
with respect to filings required to be made with the National Association of
Securities Dealers, Inc. and (y) of compliance with securities or blue sky
laws), (ii) printing expenses (including without limitation the expenses of
printing certificates for securities in a form eligible for deposit with The
Depository Trust Company and of printing Prospectuses if the printing of
Prospectuses is requested by the selling Holder), (iii) messenger, telephone and
delivery expenses, (iv) reasonable fees and disbursements of counsel for the
Company, (v) reasonable fees and disbursements of one counsel for all selling
Holders and Other Holders collectively (which counsel will be selected by
Holders and Other Holders holding a majority of the securities sought to be
included in the Registration Statement), (vi) reasonable fees and disbursements
of all independent certified public accountants referred to in Section 5.1(n)
(iii) (including the expenses of any "comfort" letters required by or incident
to such performance), (vii) reasonable fees and expenses of any qualified
"independent underwriter" or other independent appraiser participating in an
offering pursuant to Section 2720(c) of the Conduct Rules of the National
Association of Securities Dealers, Inc., and (viii) reasonable fees and expenses
all other Persons retained by the Company. In addition, the Company shall pay
its internal expenses (including without limitation all salaries and expenses of
its officers and employees performing legal or accounting duties), the expense
of any annual audit, and the fees and expenses incurred in connection with the
listing of Registrable Securities with each securities exchange, if any, on
which similar securities issued by the Company are then listed or the quotation
of such securities on Nasdaq if similar securities issued by the Company are
then quoted on Nasdaq.
(b) Notwithstanding anything to the contrary herein
contained, all underwriting fees, discounts, selling commissions and transfer
taxes, if any, in connection with the sale of Registrable Securities shall be
borne by the Holders proportionately (based on the number of Registrable
Securities sold by a Holder in such offering in relation to the total number of
Registrable Securities sold in such offering).
(c) Notwithstanding anything to the contrary herein
contained, each selling Holder may have its own separate counsel (in addition to
the counsel referred to in clause (v) of Section 5.6(a)) in connection with the
registration of any of its Registrable Securities, which counsel may participate
therein to the full extent provided herein; provided, however, that all fees and
expenses of such separate counsel shall be paid for by such selling Holder.
19
ARTICLE VI.
Indemnification
6.1 Indemnification by the Company. (a) The Company shall
indemnify and hold harmless, to the fullest extent permitted by law, each Holder
owning Registrable Securities registered pursuant to this Agreement, its
officers, directors, trustees, agents and employees, each Person who controls
such Holder (within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act) and the officers, directors, trustees, agents and
employees of any such controlling Person, from and against all losses, claims,
damages, liabilities, costs (including without limitation the costs of
investigation and attorneys' fees) and expenses (collectively, "Losses"), as
incurred, arising out of or based upon (i) any untrue or alleged untrue
statement of a material fact contained or incorporated by reference in any
Registration Statement, Prospectus or preliminary prospectus, or arising out of
or based upon (ii) any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, or (iii) any violation or alleged violation by the Company of
the Securities Act, the Exchange Act, any federal or state securities law or any
rule or regulation promulgated under the Securities Act, the Exchange Act or any
federal or state securities law in connection with the offering covered by any
Registration Statement, (each a "Violation") except for a Violation based solely
upon written information furnished to the Company through an instrument provided
by such Holder for use therein or in the preparation thereof; provided, however,
that the Company shall not be liable to any Holder to the extent that any such
Losses arise out of or are based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in any preliminary prospectus if
either (i) (A) such Holder failed to send or deliver a copy of the Prospectus
with or prior to the delivery of written confirmation of the sale by such Holder
of a Registrable Security to the Person asserting the claim from which such
Losses arise and (B) the Prospectus would have corrected such untrue statement
or alleged untrue statement or such omission or alleged omission or (ii) such
untrue statement or alleged untrue statement or such omission or alleged
omission is corrected in an amendment or supplement to the Prospectus previously
furnished by or on behalf of the Company, such Holder was furnished with copies
of the Prospectus as so amended or supplemented, and such Holder thereafter
failed to deliver such Prospectus as so amended or supplemented prior to or
concurrently with the sale of a Registrable Security to the Person asserting the
claim from which such Losses arise.
(b) Notwithstanding the foregoing, if in connection with
an underwritten public offering of any Registrable Securities, the Company, the
selling Holder and the underwriters enter into an underwriting or purchase
agreement relating to such offering which contains provisions covering
indemnification among the parties, the indemnification provided thereunder shall
be in addition to (and not in lieu of) the indemnification provided to the
Holders hereunder.
6.2 Indemnification by Holders. Each Holder selling
Registrable Securities in any Registration Statement filed pursuant to the terms
hereof shall, severally and not jointly,
20
hold harmless, to the fullest extent permitted by law, the Company, its
officers, directors, agents and employees, each Person who controls the Company
(within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act), and the directors, officers, agents and employees of any such
controlling Person, from and against all Losses, as incurred, arising out of or
based upon any Violation, in each case to the extent (and only to the extent)
that such Violation is based solely upon written information furnished to the
Company through an instrument provided by such Holder specifically for use
therein or in the preparation thereof. In no event shall the liability of any
Holder hereunder be greater in amount than the dollar amount of the proceeds
received by such Holder upon the sale of the Registrable Securities giving rise
to such indemnification obligation.
6.3 Conduct of Indemnification Proceedings. If any Person
becomes entitled to indemnity hereunder (an "Indemnified Party"), such
Indemnified Party shall give prompt notice to the party from which such
indemnity is sought (the "Indemnifying Party") of any claim or of the
commencement of any action or proceeding with respect to which such Indemnified
Party seeks indemnification or contribution pursuant hereto; provided, however,
that the failure to so notify the Indemnifying Party shall not relieve the
Indemnifying Party from any obligation or liability except to the extent that
the Indemnifying Party has been prejudiced materially by such failure. If such
an action or proceeding is brought against the Indemnified Party, the
Indemnifying Party shall be entitled to participate therein and, to the extent
it may elect by written notice delivered to the Indemnified Party promptly after
receiving the notice referred to in the immediately preceding sentence, to
assume the defense thereof with counsel reasonably satisfactory to the
Indemnified Party. Notwithstanding the foregoing, the Indemnified Party shall
have the right to employ its own counsel in any such case, but the fees and
expenses of such counsel shall be at the expense of the Indemnified Party unless
(i) the employment of such counsel shall have been authorized in writing by the
Indemnifying Party, (ii) the Indemnifying Party shall not have employed counsel
(reasonably satisfactory to the Indemnified Party) to take charge of such action
or proceeding within a reasonable time after notice of commencement thereof, or
(iii) the Indemnified Party reasonably shall have concluded (based on the advice
of counsel) that there may be defenses or actions available to it which are
different from or additional to those available to the Indemnifying Party which,
if the Indemnifying Party and the Indemnified Party were to be represented by
the same counsel, could result in a conflict of interest for such counsel or
materially prejudice the prosecution of defenses or actions available to the
Indemnified Party. If any of the events specified in clause (i), (ii) or (iii)
of the immediately preceding sentence are applicable, then the fees and expenses
of one separate counsel for the Indemnified Party shall be borne by the
Indemnifying Party. If, in any case, the Indemnified Party employs separate
counsel, the Indemnifying Party shall not have the right to direct the defense
of such action or proceeding on behalf of the Indemnified Party. All fees and
expenses required to be paid to the Indemnified Party pursuant to this Article
VI shall be paid periodically during the course of the investigation or defense,
as and when reasonably itemized bills therefor are delivered to the Indemnifying
Party in respect of any particular Loss that is incurred. Notwithstanding
anything to the contrary contained in this Section 6.3, an Indemnifying Party
shall not be liable for the settlement of any action or proceeding effected
without its prior written consent. The Indemnifying Party shall not consent to
entry of any judgment or enter into any settlement or otherwise seek to
terminate any action
21
or proceeding in which any Indemnified Party is or could be a party and as to
which indemnification or contribution could be sought by such Indemnified Party
under this Article VI, unless such judgment, settlement or other termination
provides solely for the payment of money and includes as an unconditional term
thereof the giving by the claimant or plaintiff to such Indemnified Party of a
release, in form and substance satisfactory to the Indemnified Party, from all
liability in respect of such claim or litigation for which such Indemnified
Party would be entitled to indemnification hereunder.
6.4 Contribution, etc. (a) If the indemnification
provided for in this Article VI is unavailable to an Indemnified Party under
Section 6.1 or 6.2 in respect of any Losses or is insufficient to hold such
Indemnified Party harmless, then each applicable Indemnifying Party (severally
and not jointly), in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such Losses, in such proportion as is appropriate to reflect the relative
fault of the Indemnifying Party or Indemnifying Parties, on the one hand, and
such Indemnified Party, on the other hand, in connection with the actions,
statements or omissions that resulted in such Losses as well as any other
relevant equitable considerations. The relative fault of such Indemnifying Party
or Indemnifying Parties, on the one hand, and such Indemnified Party, on the
other hand, shall be determined by reference to, among other things, whether any
action in question, including any untrue or alleged untrue statement of a
material fact or omission or alleged omission of a material fact, has been taken
or made by, or related to information supplied by, such Indemnifying Party or
Indemnifying Parties or such Indemnified Party, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such action, statement or omission. The amount paid or payable by a party as a
result of any Losses shall be deemed to include any legal or other fees or
expenses incurred by such party in connection with any action or proceeding.
(b) The parties hereto agree that it would not be just
and equitable if contribution pursuant to this Section 6.4 were determined by
pro rata allocation or by any other method of allocation that does not take into
account the equitable considerations referred to in the immediately preceding
paragraph. Notwithstanding anything contained in this Section 6.4 to the
contrary, an Indemnifying Party that is a selling Holder shall not be required
to contribute any amount in excess of the amount by which the total price at
which the Registrable Securities were sold by such selling Holder to the public
exceeds the amount of any damages which such selling Holder has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. No Person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation.
(c) The provisions of this Article VI will survive
indefinitely, notwithstanding any transfer of the Registrable Securities by any
Holder. Nothing herein shall be deemed to abrogate the effects of the statutes
of limitation with respect to causes of action that may be brought under this
Article VI.
22
ARTICLE VII.
Miscellaneous
7.1 Additional Parties. A Person may become a party to
this Agreement and cause the Shares issued to it on the Effective Date pursuant
to the Joint Plan to be Registrable Securities by delivering to the Company (a)
evidence reasonably satisfactory to the Company that it was the Beneficial Owner
on the Effective Date of Shares in an amount equal to at least 10% of the
aggregate amount of all Shares issued by the Company on the Effective Date and
(b) an executed acknowledgement by which such Person agrees to be bound by the
terms of this Agreement, which to be effective must be acknowledged by the
Company. Once so acknowledged by the Company, such Person will be a Holder and a
party hereto for all purposes of this Agreement.
7.2 Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given or made by
delivery in person, by courier service, by facsimile transmission or by
registered or certified mail (postage prepaid, return receipt requested) to the
respective parties at the following addresses (or at such other address for a
party as shall be specified in a notice given in accordance with this Section
7.1).
(a) If to the Company:
Mariner Health Care, Inc.
Xxx Xxxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
Attention: General Counsel
Telecopy: (000) 000-0000
Powell, Goldstein, Xxxxxx and Xxxxxx LLP
000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxx Xxxxx
Xxxxxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Telecopy: (000) 000-0000
(b) If to a Holder, to the address thereof set forth on
the signature page hereto.
The Company or the Holder by notice to the other may designate additional or
different addresses for subsequent notices or communications.
All such notices and communications shall be deemed to have been delivered or
given: upon delivery, if personally delivered; one Business Day after being
dispatched, if dispatched by
23
same-day or next-day courier guaranteeing timely delivery; when receipt
acknowledged, if sent by facsimile transmission; and five Business Days after
being deposited in the mail, if mailed.
7.3 Assignment. Neither this Agreement nor the rights and
obligations hereunder may be assigned by operation of law or otherwise except
that this Agreement and rights and obligations hereunder may be assigned by any
Holder to a Permitted Transferee thereof, which Permitted Transferee shall be
deemed to be a Holder and a party hereto for all purposes of this Agreement upon
receipt by the Company of such Permitted Transferee's written agreement to be
bound by the terms hereof). Notwithstanding the foregoing, nothing herein
contained shall restrict the right of any Holder to transfer securities of the
Company held by it.
7.4 No Third-Party Beneficiaries. This Agreement shall be
binding upon and inure solely to the benefit of the parties hereto and their
respective successors and permitted assigns and nothing herein, express or
implied, is intended to or shall confer upon any other Person any legal or
equitable right, benefit or remedy of any nature whatsoever under or by reason
of this Agreement.
7.5 Counterparts. This Agreement may be executed
simultaneously in any number of counterparts, each of which shall be deemed an
original, but all such counterparts shall together constitute one and the same
instrument.
7.6 Entire Agreement. This Agreement constitutes the
entire agreement of the parties hereto with respect to the subject matter hereof
and supersedes all prior agreements and undertakings, both written and oral,
among the parties with respect to the subject matter hereof.
7.7 Amendment and Waiver. This Agreement may not be
amended or modified or any provision hereof waived except by an instrument in
writing signed by the Company and both (x) Holders of at least a majority of the
Registrable Securities and (y) each Holder of 10% or more of the Registrable
Securities. Notwithstanding anything contained herein to the contrary, a waiver
that does not adversely affect all of the parties hereto may be executed by only
the adversely affected party or parties.
7.8 No Waiver. No failure or delay on the part of any
party hereto in exercising any right, shall operate as a waiver thereof nor
shall any single or partial exercise of any right, power or privilege hereunder
preclude the simultaneous or later exercise of any other right, power or
privilege. The rights and remedies herein expressly provided are cumulative and
not exclusive of any rights or remedies which any party hereto would otherwise
have.
7.9 Headings. The descriptive headings contained in this
Agreement are for convenience of reference only and shall not affect in any way
the meaning or interpretation of this Agreement.
24
7.10 Severability. If any term or other provision of this
Agreement is invalid, illegal or unenforceable under any law or public policy,
all other terms and provisions of this Agreement shall nevertheless remain in
full force and effect. Upon such determination that any term or other provision
is invalid, illegal or unenforceable, the parties hereto shall endeavor in good
faith to replace the invalid, illegal or unenforceable provisions with valid,
legal and enforceable provisions the economic effect of which comes as close as
possible to that of the invalid, illegal or unenforceable provisions.
7.11 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE.
7.12 Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled as a matter of right, without proof of actual damages, to specific
performance of the terms hereof, in addition to any other remedy at law or
equity.
7.13 Further Assurances. The parties hereto shall do such
further acts and things necessary to ensure that the terms of this Agreement are
carried out and observed.
25
IN WITNESS WHEREOF, each of the parties has executed this
Agreement as of the date first written above.
MARINER HEALTH CARE, INC.
By:
------------------------------------------------
Name:
-----------------------------------------
Title:
--------------------------------------
OCM ADMINISTRATIVE SERVICES II, L.L.C.
By: OAKTREE CAPITAL MANAGEMENT, LLC
Its Manager
By:
--------------------------------------------
Name:
--------------------------------------
Title:
-----------------------------------
By:
--------------------------------------------
Name:
--------------------------------------
Title:
-----------------------------------
Address: c/o Oaktree Capital Management, LLC
000 Xxxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxxxx Xxxxx
26
ACKNOWLEDGEMENT
Reference is hereby made to the Equity Registration Rights
Agreement dated as of May [9], 2002, (the "Agreement"), among Mariner Health
Care, Inc., a Delaware corporation formerly known as Mariner Post-Acute Network,
Inc., and each of the Holders as of the Effective Date of at least 10% or more
of the outstanding Shares on the Effective Date, as listed on the signature
pages thereto, in which this Acknowledgement is incorporated. The undersigned
Holder represents that it was the Beneficial Owner as of the Effective Date of
at least 10% or more of the outstanding Shares on the Effective Date. The
undersigned Holder and the Company each agree that the Holder will be a party to
the Agreement for all purposes thereof. Capitalized terms used herein without
definition are defined in the Agreement.
[HOLDER]
By:
--------------------------------------------
Name:
--------------------------------------
Title:
-----------------------------------
Address:
---------------------------------------
---------------------------------------
Acknowledged and Agreed:
MARINER HEALTH CARE, INC.
By:
--------------------------------------------
Name:
--------------------------------------
Title:
---------------------------------
27
